Turkish minister: Gas price talks with Russia promising

The negotiations between Turkey and Russia about pricing natural gas and a new gas pipeline look promising, a Turkish official said Wednesday.

Speaking to Turkish television network NTV, Taner Yildiz, the Turkish energy minister, said that the two previous meetings were not successful, but that the ongoing negotiations with Russian gas company Gazprom’s top official, Alexey Miller, looked promising.

“With the oil price slump, natural gas prices are falling as well. This affects gas producing countries, like Russia, negatively, and puts a strain on the ongoing negotiations too,” he added.

Yildiz said that the current gas prices are at Nov. 2008 rates, despite the rise in value of the U.S. dollar.

Natural gas prices are mostly indexed to crude oil prices. Since gas contracts are renewed every six months, prices for new gas contracts are determined by past prices of crude oil.

“We have also agreed with the Russian delegation in principle that we will move on to take more solid steps towards the new gas route through Turkey, instead of having non-binding agreements,” Yildiz said.

In December, Russian President Vladimir Putin scrapped the South Stream natural gas pipeline project planned to pass through Bulgaria to Europe, and announced that a new natural gas pipeline route through Turkey’s northwestern Thrace region. He also announced that a natural gas hub on the Turkish-Greek border will be constructed.

“The project named ‘Turkish Stream’ is planned to carry 63 billion cubic meters of natural gas annually. We aim to begin construction before the end of 2016,” said Yildiz.

Yildiz underlined that there was a significant increase in domestic natural gas usage in January, saying that Turkey used 2 billion cubic meters of gas in 10 days.

“Turkey uses 48-50 billion cubic meters of gas per year on average. This means we used 4 percent of total annual consumption in just 10 days,” he said.

“Any increase in domestic gas prices is out of question, and there are no problems with natural gas supply security. But, we should be more careful about the consumption levels in February and March,” he concluded.

Turkey’s total cost of energy imports totaled $239 billion between 2009 and 2013, according to data from the Turkish Statistical Institute.